Friday, April 30, 2010

I'm sorry to hear that the university's $750 million endowment has fallen in value to $500 million because of the recession and because your bank died. I'm also sorry to hear that you're dealing with declining enrollment due to the fact that middle-class families are no longer willing or able to bet their homes on a $45,000-a-year higher education for their children. I really am.

So, what I want to know is, why are you wasting money on glossy fundraising brochures full of meaningless synonyms for the word "Excellence"? And, why are you sending them to ME? Yes, I know that I got a master's degree at your fine institution, but that master's degree hasn't done jack shit for me since I got it! I have been unemployed for the past TWO YEARS and I am now a professional resume-submitter, sending out dozens of resumes a month to employers, and the degree I received in your hallowed halls is at the TOP OF IT and it doesn't do a fucking thing.

You know, maybe if you wanted a little bit of money from me (and these days you'd get about $3) maybe you should send me a fancy color brochure admitting your role in the bubble economics that got us all in to this mess.

For example, since 1987, higher education expenses have gone up 450 percent, while personal income in this country has gone up 87 percent, making tuition IMPOSSIBLE to afford without special financing. But, during this time, you were thriving because people could come up with the cash in two ways:

1. Get a home equity loan and use the inflated value of their house to pay for their kid to get drunk and/or raped at your school and then lose the house when the market crashed.
2. Get a federal loan.

HAD IT OCCURRED TO YOU THAT NEITHER OF THESE SOURCES OF MONEY ACTUALLY EXIST? THAT IT WAS BEING MANUFACTURED BECAUSE YOU MADE PEOPLE THINK THAT ONE OF YOUR DEGREES WAS NECESSARY TO CLIMB TO THE TOP OF THE BUBBLE?

Oh yes, federal loans. I've got $40,000 of those, which are in "forebearance" right now because I'm unemployed, meaning that the feds are paying the interest for a while, which is convenient for me, but not for our government which is now owned by China. You know, the idea behind federal loans was that it would allow more students to attend your university, not let you INFLATE your tuition to obscene levels! I mean, what the fuck were you spending the $16,000 per semester on, anyway? I was in a public policy program, so that meant we got to sit in classrooms and listen to Professor God up at the front of the lecture hall glorify Himself and Creation as He saw it and talk about how much smarter he was than anyone else and how much he'd learned at MIT and the RAND Corporation.

Really, that's about all you did for us -- gave us a lecture hall, gave us an arrogant bastard to listen to, and gave us a room full of computers we could use sometimes, and you gave us a degree that employers look at and say "This guy knows how to write reports. Amusing." And I will be paying for this privilege until I am 51 years old.

So I'm sorry that the economy's been rough on you. Maybe, if you wanted to save a little money, you could stop printing and sending brochures to my parents' house (oh yeah, that's where I live because I can't afford rent on ANYTHING). And, maybe I'll donate a little bit of money to you in 2030, when I get the loans for your imaginary education PAID OFF!

Sincerely yours,
Alumnus

Location: Seattle, WA

it's NOT ok to contact this poster with services or other commercial interests

Tuesday, April 27, 2010

The basic hypothetical is that we imagine that every aspect of the tea party movement was racially flipped. So instead of a majority white population organizing big rallies and shouting down various Congress-persons, we think about what would happen if it was a majority black population.

Let's overlook the fact that there is a massive and extremely obvious divide within the Tea Party itself, one half - let's call it the "Ron Paul" half - being principled and committed to limited government, sane foreign policy and an end to the abominable economic policies that have pervaded the government for decades. This group includes many libertarians, and larger grass-roots groups like Young Americans for Liberty (who's modest UCLA chapter I recently produced a miniature "documentary" about 10 days ago).

Much like the students in this video - I strongly believe that at least the Ron Paul half of the Tea Party movement hasn't one predominately racist component to it what-so-ever. In fact, like many of the interview subjects above, I feel that the racism claims made by many people in the media are purely a way to discredit an otherwise valuable and intelligent message... I think the overwhelming evidence vindicates that position to boot.

Regardless, there is the other half of the Tea Party to contend with - this we'll call the "Sarah Palin" half. I have less sympathy & understanding for this conglomeration of GOP whiners. These are more likely, in my opinion, to be the ones who give the whole movement a bad name. I don't have any direct evidence to back that up, but the people at UCLA weren't Sarah Palin fans at all - neither am I or are really any of my friends who are involved in this kind of thing. It remains a mystery to me why people seem to be attracted to her contradictory and often transparent set of predictable appeals to the "social conservative" base.

In omitting this divide, Tim Wise already suggests that he doesn't really understand the movement itself very well and is content to label what is actually a relatively diverse group of people into one racial stereotype.

But setting all that aside, while Tim Wise makes a couple valid points, most of his article is way off base for one primary reason:

It's not 1964!

Tim asks a number of poignant questions which are worth some deeper examination... For example, he poses the following "hypothetical":

"Imagine that hundreds of black protesters were to descend upon Washington DC and Northern Virginia, just a few miles from the Capitol and White House, armed with AK-47s, assorted handguns, and ammunition. And imagine that some of these protesters —the black protesters — spoke of the need for political revolution, and possibly even armed conflict in the event that laws they didn’t like were enforced by the government? Would these protester — these black protesters with guns — be seen as brave defenders of the Second Amendment, or would they be viewed by most whites as a danger to the republic? What if they were Arab-Americans? Because, after all, that’s what happened recently when white gun enthusiasts descended upon the nation’s capital, arms in hand, and verbally announced their readiness to make war on the country’s political leaders if the need arose."

Well, no... I don't think they'd be seen as "brave defenders of the Second Amendment", but I also don't see any reason to believe that's what their intent would have been. But more importantly, what's glaringly missing here is the difference in media portrayal of the "imagined" scenario - and this is true in each case.

In this first hypothetical, we have historical examples of exactly this happening... 50 years ago.

In that case many state & local governments thought of the people looking to assert & defend their own natural rights as scary militias (some, like the Black Panthers, actually were of course...) who needed to be stopped. In those instances National Guard and other agents of the state unleashed tear gas & fire-hoses on many of the protesters. The fire-hose may have gone out of style today, but the taser sure is popular now instead...

Yet... Again, this is not 1964. The media now looks back on those protests and the fire-hoses as a victory for progressivism (historically probably the most ironically inaccurate portrayal ever given that the progressive movement were huge sponsors of eugenics), and swells with pride at something like that happening again... Led specifically by black people or some other arbitrarily decided group.

So today, if there was a movement of 80-90% black people marching against a white president, I think the media portrayal would be heroic and it would be shown as a new victorious battle for civil rights. I also think that the 6 people carrying guns at such an event would be ignored by the media entirely - rather than highlighted, parroted and freaked out about - in order to use the media in such a way that the majority of the public is largely put at ease.

As a result, I think the majority of Americans would be feeling the opposite sentiments to Tim Wise' conclusions.

Such a protest would be widely supported in America today.

There's more from Tim Wise though:

"Imagine that white members of Congress, while walking to work, were surrounded by thousands of angry black people, one of whom proceeded to spit on one of those congressmen for not voting the way the black demonstrators desired. Would the protesters be seen as merely patriotic Americans voicing their opinions, or as an angry, potentially violent, and even insurrectionary mob? After all, this is what white Tea Party protesters did recently in Washington."

First off... I guess we have to overlook the fact that the incident being questioned here was wildly overblown and not in any way a deliberate "assault". In that instance, it's pretty clear from multiple video sources that the Congressman was spit on accidentally while an angry protester was yelling at him. I once had a science teacher (amusingly named "Tim Wiseman") in middle school who did that so often no one wanted to sit in the front row in his class. Way annoying and kinda gross... Definitely unhygienic... However, it was not something I'd have thought to arrest him for, much less consider an "assault" of any kind.

But again looking at how the media would have portrayed such an incident in general here in 2010, my guess is that it wouldn't have even made the news. The Congressmen involved would have been too busy pandering to the crowd trying to fend off any accusations of racism to be outraged by a little spittle in their faces. If it had made the news at all, the media would be spending so much time fawning all over this new glorious civil rights movement that shouting down members of congress and getting in their faces would be portrayed as courageous and daring.

Of course, the two examples above are purely hypothetical - we haven't really seen instances of this in recent memory so I'm really just speculating on what the public reaction might be. But Tim Wise gives me something even better to discuss here - perhaps unwittingly - in the next idea he asks us to "Imagine" because they are things that have actually played out in real life. Here's Wise:

"Imagine that a rap artist were to say, in reference to a white president: “He’s a piece of shit and I told him to suck on my machine gun.” Because that’s what rocker Ted Nugent said recently about President Obama."

Haven't we seen almost exactly this kind of thing repeatedly within the past few years??

What were Kanye West's many inflamatory statements about President Bush such as his 2005 remarks about Bush not caring about black people?

What was the Death of a President "mockumentary" portraying what would happen if President Bush was murdered in office?

And what about Alex Ross' beautifully iconic Bush-as-Vampire sucking the blood of the Statue of Liberty painting?

No outrage, no mass panic in the media, and no widespread concern for the safety of the president - or the republic - was reported at the time. Nothing. Zip... Nada.

All of this got (correctly) defended as free speech. Tasteless, obnoxious, stupid, a waste of time and intellectually vapid - damn right - but all perfectly acceptable ways of expressing discontent. What's more is that virtually all of the "fear" was on the government doing things to curtail speech. At the time, everyone was talking about how they felt like they "couldn't" speak their minds and that they were afraid of reprisal by the Bush administration... No evidence of that happening really ever cropped up, but the concern was that the government would abridge liberties and prohibit free speech. Not that the people protesting were going to overthrow society as we know it.

That is the correct concern to have considering the government holds all the guns, handcuffs, courts & muzzles... But that concern has completely disappeared. The government hasn't gotten less powerful, less insidious, corrupt or dangerous in the last 2 years... If anything it's only gotten worse... But now, it's the protesters that are the crazed, dangerous lunatics!

Brilliant.

So for what it's worth, I think we have as close to a real-world example of what Mr. Wise is claiming as we're likely to get, and the result was precisely the opposite of what he seems to be suggesting. Far from reacting with fear & terror at the idea of black people publicly attacking politicians, the news media typically shows non-whites as the noble underdogs regardless of the evidence of the case.

All this was going on just a few years ago, so you'd think that Tim Wise would actually be able to remember it. But I don't think he does... Instead, his claim (after a number of straw-men not really worth mentioning surrounding statements from Rush Limbaugh & Ann Coulter, etc.) is this:

"To ask any of these questions is to answer them. Protest is only seen as fundamentally American when those who have long had the luxury of seeing themselves as prototypically American engage in it. When the dangerous and dark “other” does so, however, it isn’t viewed as normal or natural, let alone patriotic...

...And this, my friends, is what white privilege is all about. The ability to threaten others, to engage in violent and incendiary rhetoric without consequence, to be viewed as patriotic and normal no matter what you do, and never to be feared and despised as people of color would be, if they tried to get away with half the shit we do, on a daily basis."

Who exactly is "we", Tim? White people? I guess we're all the same, huh? Nothing racist about that kind of remark, is there?

At any rate... Of course these protests are mostly made up of white people, but it's worth noting that since some 94% of black voters voted for President Obama, it's hard to imagine blacks being a huge component to the Tea Party movement no matter what... At least not until they realize that the actual policies endorsed and acted on by Obama are every bit as bad as anything President Bush did - and often even worse purely because the current president is standing on the unconstitutionally built shoulders of the previous one.

Mostly what I take issue with in Mr. Wise' essay is the idea that society, and especially the mainstream news media, hasn't actually changed significantly since the 60s. One thing Mr. Wise really should do at this juncture is step back and realize that his voice represents by far the majority opinion in news-rooms across the country.

Fundamentally, I think that his failure to recognize those differences has led Mr. Wise to some seriously erroneous conclusions. There is an enormous difference in the way the media frames these kinds of debates today than even just a couple years ago. If Bush had still been in office another term, he'd be getting harangued from absolutely every angle on the expansion of the wars in Iraq, Afghanistan and Pakistan, the bailouts, the take-over of health care, the government's ownership of that colossal failure of an auto manufacturer known as "GM", unprecedented deficit spending, an explosion of national debt and for listening to economic advisors who were not only completely wrong on the state of the economy in 2005-2007, but who have consistently failed to produce even their most conservatively predicted "results" through economic stimulus spending and other idiotic boondoggles.

If it was a primarily black movement in opposition to Bush, I think it's fair to assume that it would have been portrayed as a laudable throwback to heroic times... Certainly the "they're all racists!" meme wouldn't gain any traction (since as we all know, non-whites cannot be racists) and the media might actually be taking a deeper look at the actual issues being brought up. And of course, dissent would still be "patriotic".

But dissent isn't patriotic anymore. It's now referred to as "the party of no", "obstructionist", and "dangerous". Funny thing is, the fears of racism & violence are simply convenient ways to distract from the issues that need to be addressed. And as the video above notes; while of course there are probably a number of racists out there who hate Obama and are willing to show up at big events with stupid signs, racism is most certainly not the main focus of the movement at large.

Writing about race is a delicate subject - and as the top of my blog states, I welcome differing opinions here, so feel free to disagree. But the important thing is to remember that we're living in 2010 now. We have the ability to look back on the Civil Rights era years and understand that if anything the current Tea Party movement actually has more in common with the civil rights activists seeking more freedom through the more even application & reduction of government force than they do with the agents of government turning on the spigots and firing beanbags into crowds.

Naturally public schools do a horrific job of explaining this point clearly, but institutionalized racism and even slavery itself wasn't a "natural" condition of humanity. It required the backing of laws, guns & jails to maintain, since without those things all those who were enslaved would simply have gotten up and walked away. Slavery, segregation, Jim Crow, "separate but equal", and racial discrimination were aspects of government control on society... They were most expressly not a problem of "too limited" government.

It was, in fact, limited government that was the goal of civil rights activists - insofar as they wanted the government to no longer have the authority to oppress them and other unfavored minorities and wanted the removal of all the various laws preventing blacks from enjoying the same rights as white people did. Some went beyond this by asking for additional types of reparations - which, at the time, given that many individuals had personally lived through legally mandated segregation, violations of basic rights to liberty, property, speech & due process, and other egregious offenses to humanity; there's no doubt in my mind that many of those reparations were warranted.

But that was 1964...

Today... The scene is altered significantly, even though the root of the issue for the Tea Party crowd is somewhat the same... Government has power it shouldn't have, should never have had, and doesn't know what to do with. So while sure, there's still racism out there, Tim Wise' world view suggests that the reaction to a massive black protest movement would be like it was in the 60s when in fact that's probably the opposite of true now... Wise' views are now "the establishment" that he might have been fighting against 50 years ago, and those protesting against the established order are now the activists & rebels seeking limited government today.

Funny how things turn in cycles like that, isn't it?

Personally I hate writing about race. It is always the least interesting thing, by far, about any person I meet... But occasionally, I find myself wading into its murky waters purely because of articles like this one from Tim Wise. Of course, as I noted above, the Tea Party movement - or at least the vast majority of it as far as I can tell from its outskirts and from talking to real people involved (rather than speculating on intentions or whining about what Rush Limbaugh said this week) - just isn't focused on racial issues... It's focused on spending, taxation and government power issues instead, and that is something that I would think all minorities would be able to appreciate - but far too many people who don't look very closely are truly and amazingly missing the point.

Monday, April 26, 2010

"How fucked up does a government have to get in order to persecute the fucking Amish?"

No kidding...

Apparently we live in a country where agents of 3 law enforcement bureaus can show up with a warrant allowing "reasonable force" at 4:30 in the morning to search & prosecute THE AMISHfor the possible illegal sale of... Milk.

That's right... MILK!

Former Reason Magazine staffer, Mike Riggs reports on this amazing bit of government at the Daily Caller:

“When I was just about done milking, Schafer and the other agent came in the barn and wanted me to answer some more questions. I told them I would not. The second agent said, ‘Are you gong to deliver those coolers to Bethesda and Bowie Maryland?’ I just looked at him. Then Schafer made a gesture and said, ‘The stickers with those towns names are on the coolers,’ as through to say, you might as well tell me.”

Allgyer refused to say anything and the agents left. Several days later, Allgyer received a letter from the Food and Drug Administration that read, “An investigation by the u.s. Food and Drug Administration has determined that you are causing to be delivered into interstate commerce, selling, or otherwise distributing raw milk in final package form for human consumption.”

The letter does not list the evidence against Allgyer, nor does it name specific violations. In fact, the letter from the FDA says exactly the opposite: “This letter is not intended to provide an all-inclusive list of violations.” Two paragraphs later, the letter instructs Allgyer to report within 15 days “the specific steps you have taken to correct the noted violations.”

“Failure to make prompt corrections could result in regulatory action without further notice. Possible actions include seizure and injunction.”

That's right kids... Not even the Amish are allowed to operate free from search, seizure & prosecution. And assuming these folks were, in fact, selling their (omfg!) raw milk across state lines, who was harmed?

The buyers who want to drink milk straight from the cow?

The seller who wants to earn a living through hard, honest farm work?

Plenty of people want to drink raw milk. Plenty of people want to sell it. Plenty of people are well-aware, and can very easily be made aware of the various "risks" associated with the product. So why is this a crime in the first place? And once it has been completely wrongly established as a "crime", how exactly does that give the FDA and the various law-enforcement agencies involved the right to show up in the dark, barely say two words to a peaceful, unarmed farmer and then proceed to search their premises with an exceptionally broad warrant and follow all that injustice up with a letter that says they must change their behavior without providing a list of behavior to be changed?

In my world... This is a clear violation of the Amish family's right to property, and the right of everyone involved's right to associate. If that's true, then it's also then a violation of the 4th, 5th & 1st Amendments to the U.S. Constitution... You know, not to be nit-picky about due process and all.

But who am I kidding? Seriously, the FDA should have a say in what kind of milk you drink, right? I'm sure that's for the best.

Monday, April 19, 2010

Shortly after writing my Goldman Sachs "conspiracy theory", it occurred to me that I left out a crucial - and rather irritating - side note: President Obama's disingenuous populist act regarding big business and the completely fictitious oppositional relationship he has with it.

Obama is out there stumping this faux-populist message, pretending that the financial industry doesn't want the regulations - when clearly, the big players definitely do! Darlene Superville of the AP reports:

"Obama criticized financial industry interests for opposing the proposed regulations and for waging a "relentless campaign to thwart even basic, commonsense rules.""

In what world is this the truth?

I've already explained precisely why Goldman Sachs benefits from the new legislation, and major news sources - even the most blatantly pro-Obama or pro-state ones - have already widely reported on Goldman Sachs' support for it.

Personally, I get really sick of this myth that big business hates these regulations. It's nothing more than a great narrative that's been hammered into people's minds by government aided by not only the news media, but entertainment - film, television & radio - for decades as well. The lesson everyone, everywhere, needs to learn is that most corporations love corporatism. Any way a business can use the law to make life more difficult for their competitors, and any time a business can secure special privileges from the government which no one else has (see: Blue Cross/Blue Shield, among many others), they are going to be in favor of those "regulations".

Ironically, most small businesses do hate big government regulations like this because they most often severely hamper their ability to compete and strongly favor the existing major players. But aren't the "small" businesses - the ones that employ most people in America, and the ones that aren't filled with multi-millionaire executives and which have billionaire owners; the ones that have no connection to the powerful politicians in Washington - the ones that Obama is claiming to be protecting in all this?

As usual however, claims & reality aren't even in the same ballpark.

So I leave you with a personal favorite quote by Milton Friedman in 1978:

"Business corporations in general are not defenders of free enterprise. On the contrary, they are one of the chief sources of danger....Every businessman is in favor of freedom for everybody else, but when it comes to himself that's a different question. We have to have that tariff to protect us against competition from abroad. We have to have that special provision in the tax code. We have to have that subsidy."

He was, is, and probably will always becorrect on this point. And there is no better argument I can think of for why the power of the state always needs to be extremely limited in matters of the economy. As long as there is power to broker & influence, there will always be those well-connected folks who are pulling the strings.

Sunday, April 18, 2010

A number of news articles over the last couple days have made me curious about something... And that curiosity has developed into a miniature conspiracy theory.

Granted, I generally hate conspiracy theories. I usually find them to be entirely implausible - at least when they become so overly complex and massive that thousands of people in dozens of bureaucracies would need to be in on it, like suggesting that the moon landing was staged.

So perhaps we should consider this to be more of a "back room deal" than anything else. That's not implausible at all, and in fact is a mainstay of politics through out the centuries... Like all excellent conspiracies... This one involves scandal, subterfuge, wealth and power centered around powerful politicians and the banking elite that keep them where they are - in this case those at Goldman Sachs.

Here's what we know:

1. The Government is currently advocating for significant increases in financial regulation:

I've written before on this blog about how bad an idea all this regulation is, but one of the main ways the administration has been pushing all this is by constantly fear mongering about the state of the economy without the new rules. Now, they did exactly this at the beginning of bailout season a year+ ago, and of course the economy today is far worse than what they claimed was the worst-case scenario without any government intervention... So their track record on this kind of thing is pretty abysmal.

Stalwart mouthpiece of the government, Business Week, reports on President Obama's latest claims:

"[Obama] said his plan to overhaul U.S. financial regulations is the only way to prevent the “turmoil that ripped through our economy over the past two years..."

The piece goes on to describe why the administration thinks it must have "control" over various aspects of Wall Street, from regulating derivatives to restructuring companies.

The government is also trying to pretend that this won't be an obvious way to provide a virtually limitless legal structure for bailing out favored companies, but some critics seem to be able to see through all that... I have no love for Mitch McConnell, but from the Business Week article:

" Senate Republican Leader Mitch McConnell of Kentucky disputed this point, saying the bill as passed by the banking panel last month “institutionalizes and sets up in perpetuity taxpayer funding of bailouts” because it grants the federal government authority to unravel institutions whose failure threatens the financial system."

Obama apparently called this a "cynical and deceptive assertion", but looking at the history of these things would suggest otherwise. Giving a government the power to decide which companies are and aren't a "threat" to the financial system is tantamount to giving them carte blanc license to simply decide which companies will be allowed to exist and which will get special privileges. This is a recipe for disaster, and clearly a remarkably easy way of turning most major business decisions into contentious political issues... Conveniently giving businesses even more incentives to pump as much of their resources into lobbying and political manipulation as possible - which any observer should note is exactly what has increased along with government power in America over the years.

So we know that the government is currently trying to build up support for new legislation taking control of even more of the U.S. economy.

2. Goldman Sachs is also advocating & supporting this new financial regulation:

For reasons I absolutely cannot fathom, most people have this bizarre belief that big business and big government work against each other.

The opposite is true.

In the early days of health care "reform" debates, Wal-Mart - everybody's favorite evil retailer - supported government mandates forcing employers to provide insurance to their employees... People were shocked and confused. Later on, PhRMA (the Pharmaceutical industry's lobbying group) gave $150,000,000 in support for pro-health care "reform" advertisements... People were shocked and confused. And now... Major investment bank, Goldman Sachs, supports financial regulation. According to the Washington Examiner:

"The nation's largest investment bank, famously cozy with top government officials in both parties, has tipped its hand to its shareholders, indicating that major financial "reform" proposals will help Goldman's bottom line...

...These are the very "fat cats" to whom Obama directed his trash talk in January: "If they want a fight, that's a fight I'm willing to have." Well, it looks like they don't really want a fight. It looks like they want more regulation. The question is: What's in it for Goldman?

If you take Blankfein and Cohn's word, stricter federal liquidity and capital requirements would amount to regulators doing Goldman's work for Goldman. They want Uncle Sam to mitigate "uncertainty about counterparties' balance sheets." That is, they want the government to reduce the risk that Goldman's debtors or insurers will run into trouble.

This is an odd function of government: Making Goldman Sachs feel safer in its business dealings."

...Again, people are shocked and confused.

Know why I'm not shocked or confused? Because large corporations have always done this! In each of the above examples - as the Washington Examiner explains with Goldman Sachs - the regulations are going to benefit the major corporations. Typically these benefits come at the expense of smaller competitors. In the Wal-Mart example, that's exactly what happens. With regard to PhRMA (and eventually the insurance industry as well) supporting health care "reform", they stood to maintain their position as a cartel and gain tens of millions of new customers now forced to buy their products by law.

So that's the second issue - we know that Goldman Sachs is in favor of financial regulation.

3. Goldman Sachs is being investigated on accounting fraud charges by the SEC - and that will help obtain support for the new legislation:

As of last Friday (April 16th), the Securities & Exchange Commission is now (quite publicly) investigating Goldman Sachs on accusations of fraud. According to Marcy Gorden of the Associated Press:

"The civil charges filed by the Securities and Exchange Commission are the government's most significant legal action related to the mortgage meltdown that ignited the financial crisis and helped plunge the country into recession.

The news sent Goldman Sachs shares and the stock market reeling as the SEC said other financial deals related to the meltdown continue to be investigated. It was a blow to the reputation of a financial giant that had emerged relatively unscathed from the economic crisis.

Goldman Sachs denied the allegations. In a statement, it called the SEC's charges "completely unfounded in law and fact" and said it will contest them."

Now this is the interesting part to me and where the analysis all sort of converges.

Goldman Sachs is highly connected with the Obama administration. They were his second largest campaign contributer, donating nearly $1 Million in 2008. Many people who are upper-level advisers and key central planners of the American economy were formerly employed by Goldman Sachs... For example, current Chief of Staff of the U.S. Treasury, Mark Patterson; former Secretary of Treasury, Henry Paulson; Chairman of the New York Federal Reserve, Stephen Friedman; as well as former Secretary of the Treasury & current adviser, Robert Rubin were all upper executives or CEOs of Goldman Sachs.

Most importantly of all, however... This public whipping investigation will provide ample fodder for Obama to drum up public support for the new regulations. It will be (and already is) extremely easy for administration officials and their supporters to hold up this example and say that new rules can prevent these sorts of things in the future.

This is patently untrue, of course... But it's easy to see the political benefit of a loud, visible investigation of Wall Street. It's a populist dream, pitting the government against one of those horrendously unpopular investment banks, and seemingly giving the administration this heroic aura in the process. Even the L.A. Times notes this reality:

"Fraud charges leveled against the investment bank Goldman, Sachs & Co. center on complex financial dealings. But for President Obama, the accusations against the venerable Wall Street institution offer a chance to revitalize a simple political narrative that he has all but lost in recent months: that he and his party are protecting ordinary Americans victimized by the economic meltdown."

So even though there might be a brief dip in Goldman Sachs stocks, the reality is that this investigation ultimately helps them achieve their long term goal of getting the government to write new financial regulations.

The SEC is probably marginally independent enough for this to be purely a coincidence, and they definitely have a massive incentive to find some big examples to make up for the fact that they clearly let everyone down repeatedly in the last several years across the board with scandals like Bernie Madoff's ponzi scheme... I would like to give them the benefit of the doubt, but it's important never to underestimate the power of politicians to influence various agencies like the SEC and it's even more important not to ignore the lengthy & sordid history of regulatory capture involved.

Major investment bank executives and their various bankers aren't idiots. In many ways they are made up of the best & brightest finance schools have to offer. Far brighter, in fact, or at least far more savvy than SEC bureaucrats as a general rule. They're certainly better paid.

So it's not that much of a stretch to suggest that Goldman Sachs could have fairly easily pulled some strings and gotten themselves out of any serious investigation if they wanted. And of course, there's nothing to suggest that they haven't done this, and that the SEC investigation is going to be all that serious anyway. My guess is they'll wind up with a slap on the wrist, at best, and their stock will rebound quickly.

At any rate... I just don't think the investigation is going to be an issue for them in the long run, and it certainly does bring up some interesting questions in my mind.

So.... This is the "conspiracy theory" I propose:

Goldman Sachs could very likely be working with the Obama administration to present a public display in the form of a visible SEC investigation which will provide support for a financial regulation bill - which current & former Goldman Sachs employees will have an immense influence in writing... In exchange for agreeing to short-term stock declines based on a minor public whipping, Goldman Sachs will be providing significant help to get the new laws they support passed.

The government wins because the legislation provides for more political control over the economy - which means more opportunities for politicians to promise goodies to constituents and more power to decide who wins & who loses. That means easier re-election campaigns, more authority, more stuff named after them and more attention & special "perks" from lobbyists & interest groups for those politicians as they try to influence business outcomes and collect on favors that make themselves wealthy at the taxpayers' expense.

Goldman Sachs benefits from all of this immensely because of quid pro quo and being highly influential in writing the legislation to begin with... In this case they're trading some short-term "pain", which may not even be very real to begin with, for long-term gains by passing their risk-minimization costs on to the taxpayers.

One constant in economies heavily controlled by government, where politicians control economic outcomes is this: As long as the major players (in investment banking and other industries) maintain their politically well-connected positions, they will always be the winners.

I'm not sure if this counts as a conspiracy, and I have no proof of any specific back room deals, but I think it might be historically naive to think that it's all just a coincidence - especially since everything about it lines up favoring the interests of big government & big business.

Saturday, April 17, 2010

Here's a miniature documentary I created over the past couple days based on a small-scale event sponsored by the UCLA chapter of Young Americans for Liberty.

A few guys came out to pass out some miniature Constitutions, flyers with facts about the national debt, and engage some of the student body on economic issues affecting their future. Full disclosure: Though I really went in the capacity of documentarian, I even talked to one student for a little bit on deficits. I don't know if I got through to him... I tried to reference the burden a high national debt places on the national standard of living to the way high levels of college loan debt (like I have, and like I presumed a UCLA student might have) individuals are often burdened with puts a hamper on their standard of living.

Turned out, the guy's dad was paying for his college, so.... Oh well.

In truth, you really don't want me being the guy to talk to people verbally anyway. My view - as if this blog hasn't made things perfectly clear on this front - is that everything in the world of economic activity is highly interrelated. So it's not enough for me to say "high national debt is bad" or "government spending is a drag on the economy", I have to explain with examples and tangents, in-depth discussions of complex concepts and ultimately take my listener on a ride through economic history.

That's decidedly too complicated and useless for convincing a 20 year old Sociology major.

Anyway, as the disclaimer on YouTube says - I didn't have optimal gear with me at the time. I had no decent camera and so I had to put up with all the dropped frames and glitches of my Motorloa Backflip's built-in video function. Fortunately, the day was truly saved by the fact that virtually any time I leave the house with my bag I've got my fantastic Tascam DR-100 field recorder in tow. The audio quality through the phone would have made this video completely impossible, and even though I didn't have a windscreen and there is a bit of wind noise here and there on the recording, the audio is generally crystal clear and really saved the day.

I think in spite of minor technical difficulties and this being such a spur-of-the-moment, short-notice kind of a thing, it turned out quite well due to the intelligent and well-spoken subjects on camera... Visit my YouTube page for the YAL guys' names, and by all means subscribe to my channel, to this blog, and be sure to "like" the video and help it gain exposure. Oh and, of course email me at seanwmalone@gmail.com any time with requests to hire me and proposals for new media productions.

Tuesday, April 13, 2010

For months, I've been trying to explain to everyone I know that the health care "reform" bill recently passed by Congress operates under a severelyflawed premise by conflating insurance with actual health care.

One of the consequences of this is that instead of dealing with the supply of health care resources - including services provided by trained professionals like doctors & nurses - economically illiterate politicians have focused their efforts only on adding to the demand for those resources through expanded government funding and mandated insurance. One thing that economics teaches us is that if there is a good that commands a comparatively high price (like medical care), then there is significantly lower supply of that good than there is demand for it.

As much as people like to pretend that health care doesn't fit economic principles, reality says otherwise.

Consequently, it has long been obvious to me that this will all be catastrophic. The main problem here, as always, is the centralized control over the market for all aspects of health care. For instance, the government-granted - and entirely monopolistic - control the American Medical Association has over medical licensing is a huge problem. Of course, even if the AMA didn't do such an abysmal job predicting future demand for doctors - and thus miscalculating on medical licensing allowances - the incentives for even becoming a doctor are quickly disappearing in the United States anymore. So when articles like this one from the Wall Street Journal come out, I am not surprised...

As I've discussed on this blog before, the United States was already looking forward to a serious shortage of doctors thanks to centrally planned medical licensing - but with the drastic increase in demand for the remaining service providers, that shortage is going to turn into a full-blown disaster. According to the WSJ:

"Experts warn there won't be enough doctors to treat the millions of people newly insured under the law. At current graduation and training rates, the nation could face a shortage of as many as 150,000 doctors in the next 15 years, according to the Association of American Medical Colleges...

A shortage of primary-care and other physicians could mean more-limited access to health care and longer wait times for patients."

This is not only a result of medical licensing controlled by the American Medical Association, but also a result of Congress being the primary funding source for medical residencies. Even though a handful of new medical schools have opened recently, the number of new doctors in training is will only increase by a paltry 340 per year. More significantly, the Wall Street Journal reports that:

"...medical colleges and hospitals warn that these efforts will hit a big bottleneck: There is a shortage of medical resident positions. The residency is the minimum three-year period when medical-school graduates train in hospitals and clinics.

There are about 110,000 resident positions in the U.S., according to the AAMC. Teaching hospitals rely heavily on Medicare funding to pay for these slots. In 1997, Congress imposed a cap on funding for medical residencies, which hospitals say has increasingly hurt their ability to expand the number of positions."

Go figure.

This is fundamentally the problem with having bureaucrats & politicians, and their buddies in government-backed licensing agencies control the supply of resources.

But the nightmare hardly ends there... The L.A. Times today provides us with a remarkably biased and mostly idiotic story highlighting the reporter's shock that even after the health care reform bill has passed, insurance companies will still be able to raise premiums. I'm not sure what the reporter expected to happen, since - yet again - we now have an immense number of new people chasing after a decreasing supply of resources. That necessarily means prices are going to rise as goods become more and more scarce.

Perhaps more significantly, the L.A. Times article references customers of insurance companies as "ratepayers", highlighting the truth of the situation we have now. The insurance companies are no longer private entities in the sense that matters. Now, health insurance is run the same way as licensed public utilities.

Depressingly, the "solution" proposed by the article is a tried and completely false reliance on mandates & price controls:

"Although Democrats promised greater consumer protection, the overhaul does not give the federal government broad regulatory power to prevent increases.

Many state governments -- which traditionally had responsibility for regulating insurance companies -- also do not have such authority. And several that do are now being sued by insurance companies.

Naturally, leave it up to one of my own idiot senators from California to come up with the worst possible response to a problem of this nature.

So here's the thing... We've set up a public utility-like cartel among insurance providers with extremely limited competition and removed any incentive and ability for competitors to enter the market, and then we've handed them - according to supporters of the bill - 32,000,000 new customers who will be subject to legal action if they don't pay up and we've prevented insurers from doing anything actuarially sound like denying people . At the same time, we've limited the number of medical residencies and imposed huge fines and new taxes on the providers of health care products such as drugs and medical technology - thereby making doctors, hospitals, drugs & everything else more and more scarce.

Price controls only make this situation worse as insurance companies who are already earning under 3% profit margins will be making <0% for their trouble. So as those companies go out of business (or get taken over by the government - which cynically speaking, may very well have been the plan all along), access to real health care and even money available to pay for that care will dry up.

This means that in reality, what we're looking forward to is not enough doctors, not enough hospitals, not enough drugs, MRI machines or flu shots - and significantly reduced incentives for anyone to make more of any of those things, much less to innovate new products... And thanks to government subsidies and mandates, there will be far too many people demanding whatever resources & professional services remain available.

Carefully consider all this... For the last 50+ years, we've been steadily destroying health care through mandates, subsidies, controls, & cartels - all of which have detached prices from consumers & producers, and eliminated competition in the marketplace. This is really not a good thing.

So I can't see how the inevitable future will be a surprise to anyone, but I suspect that I will be reminding far more people than I'd like of exactly what I said over the last couple years for the next decade or more.

Sunday, April 11, 2010

To be honest, a post with this title deserves WAY more than one measly little quote, but this one is pretty astounding. Here is the principle author of the Bill of Rights explaining why the General Welfare clause in the U.S. Constitution should never have been so broadly interpreted. This was a warning that wasn't heeded:

"If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every State, county and parish and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision of the poor; they may undertake the regulation of all roads other than post-roads; in short, every thing, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress.... Were the power of Congress to be established in the latitude contended for, it would subvert the very foundations, and transmute the very nature of the limited Government established by the people of America."

Friday, April 9, 2010

Last Christmas I was at my folk's house in Portland (Oregon, not Maine...) when my dad was watching a YouTube video in which some "Tea Party" guys were saying some really astoundingly idiotic things. It was strange though... The people in the video did something that struck me as rather suspicious, so I pointed out that it was unlikely that the guys in it were actually affiliated with the Tea Parties, since they used the word "tea bagger" to describe themselves.

For those of you who are unaware... "Tea bagger" is actually a derogatory term used by immature and mediocre "journalists", like Rachel Maddow to lay a blanket insult over the tea party movement. It's most certainly not something that these folks would ever use to describe themselves.

Trouble is... A lot of people, including my dad, have biases that prejudice them towards believing the stuff said about the Tea Party movement in mainstream news. At the time, I was merely voicing a suspicion, but I suspect I was more right at that time than I even really knew... For instance, today, I just learned of a little group devoted to producing exactly that kind of misinformation:

Here's an organization that's designed itself to infiltrate the tea party movement and find ways to make it look bad on TV. They have a little mission statement, in which they note that their goal is:

"Whenever possible we will act on behalf of the Tea Party in ways which exaggerate their least appealing qualities (misspelled protest signs, wild claims in TV interviews, etc.) to further distance them from mainstream America and damage the public's opinion of them."

I think this is pretty telling though, in a lot of ways...

Much like the recent accusations of racial/homophobic slurs that have yet to be backed up by a single piece of photographic or video evidence, I think we have a situation where people are trying to discredit these organizations by lying about them and picking the worst (non-representative) parts and pretending that they're the mainstream. It's kind of a weird form of ad hominem, but what's irritating about this to me is how effective it is and how easy it is for most people who just watch TV news to believe it.

What sort of bothers me from a broader perspective is the tendency for so many actors in modern public discourse to resort to these kinds of tactics instead of actually debating anyone. The bulk of the media that gets produced any more tends to operate based on a series of ad hominems, strawmen and red herring fallacies (to say the least).

Instead of being honest and open about everyone's beliefs, so much time is spent trying to manipulate people into hating "the other side".

The guys who are running the show at "Crash the Tea Party" claim that they're "sick and tired of that loose affiliation of racists, homophobes & morons; who constitute the fake grass-roots movement which calls itself the Tea Party". But if the Tea Party really was just an affiliation of racists, homophobes & morons, then it shouldn't be very hard to get real media coverage of them as such, right? If they were really all that this website claims, then the "crashers" wouldn't need to resort to lies and deception to state their case, would they?

This kind of thing happens a lot more than people realize though, largely because reporters are generally gullible and don't really care too much about fact-checking anymore... So how hard is it to just say something racist on camera and claim you're a part of the group? People like my dad already want to believe that the Tea Partier's are racists and that the movement is more about the President being black than it is about the espoused hot-button issues of expanding government power, excessive taxation & massive, unsustainable deficits. Portraying these people as racists is just a way to meet a lot of people's existing confirmation bias.

And quite honestly, it's easier for a lot of people to whitewash the anti-government crowd with insults and ad hominem attacks than it is to deal with the reality of the problems they are discussing.

$100 Trillion deficits aren't a palatable topic for the average citizen who would really like to believe their wonderful country has been run by benevolent people who know what they're doing. It's pretty hard for a lot of people to even consider the idea that there are consequences ins store for the US that are actually predictable. Lest we not forget, when Peter Schiff was sounding alarms on the economy, he was busy being laughed at.

So instead of dealing with the real issues, and instead of having an honest debate about ideas in this country, we have people who are far happier to just discredit their opponents with dirty tactics and lies... I'm sick and tired of that.

Anyway... Mostly this is just something to take stock of, and seems as good a reminder as any that you can't believe everything you read or see on TV.

Worthy advice, if you ask me.

*Disclaimer: This essay is not invalidated by the fact that people from all political persuasions use strawmen... So please, let's not hear any whining about how "they do it too!"*

Thursday, April 8, 2010

Far too often, we are asked to choose "left", or "right", as if these choices are actually meaningful or relevant to our lives and the lives of others. Politicians make campaigns out of the supposed differences between them and their opponents, even when their actually beliefs in terms of policy are nearly identical. Barack Obama & John McCain both returned to the halls of Congress mid-campaign during the 2008 Presidential Election in the United States, each citing the urgent need to "do something" about the financial crisis. But although they each belong to different parties and although we are told to believe they represent opposite viewpoints, both returned to Washington to support the corporate bailouts of Wall Street.

In reality, we need to break away from the false dichotomies that we are taught to follow from a young age. The only choice that matters is whether or not you believe people should be made to do what you believe they should with guns, police, jail and force, or whether they should be free to choose for themselves what to do with their minds, bodies & property.

What's more, this choice is the great determining factor in getting along with people voluntarily - if not as friends, than at least as people we tolerate.

Speaking as an atheist, many of my friends - including my roommate - are religious. We get along, in spite of profoundly divergent philosophies, because neither of us forces our beliefs on the other and neither of us supports the use of legislation to do that by proxy.

Ponder this for a moment though...

Who are the people that rub you the wrong way? Are they people who you simply have disagreements with? If you're like me, sometimes I'm sure that's true... But again, if you're like me, the people who really get to you are not just the ones with whom you have little in common, but the ones who demand that you conform to their views and go to government to enforce their positions. The obvious examples are usually the "Religious Right", and people using the law to impose religious values on others - but there are thousands of examples on all "sides". Environmentalists using the law to push people into buying Priuses, banning certain televisions & lightbulbs, or subsidizing favored foods. Food nannies, war-mongers, censorship advocates, drug-warriors, anti-obesity zealots... All of these people have one thing in common: Force.

As I've written on this blog dozens of times, people's values are subjective and individually defined. There is not a one-size-fits all set of "morality", no "correct" level of acceptable financial or personal risks, and no universal standard of taste.

Society as a whole benefits tremendously from this real diversity, though... We are not all mindless automatons. We are unique people who influence each other in complex and unpredictable ways as individual preferences get adopted and culture changes. This can't happen if some people are forcing their view of the world on others... The most outspoken, devout priests and the most blasphemous atheists like myself, the most "liberal" and the most "conservative" among us can all be friends if we agree on one simple thing: None of us may use violence or the threat of force to coerce anyone else into behaving or believing the way we do.

It's really that simple.

So left and right are just rhetoric. They are meaningless differences used by crafty politicians and orators to set up dichotomies where none really exist, all the while using that bit of misdirection to drive us all towards a road where we lose our liberties. This is happening in the US all the time, and I personally think it's time to end the trend.

So again, the choice is Tyranny, or Liberty. There is no other option. Which will you choose?

[And yes, I wrote, animated, edited and then composed & produced the music to the video above... Hope you like it.]

Tuesday, April 6, 2010

In a country where we are supposedly free to speak our minds in whatever context and through whichever medium we so choose, the mere existence of a "Federal Communication's Commission" is an insult to the First Amendment.

One would think it would be obvious to anyone reading the Bill of Rights for the first time that an agency that is dedicated to dictating and regulating what is acceptable speech in the US would be patently unconstitutional as it is, but somehow our government managed to find ways to weasel it in anyway. Sadly, with each new mass communications technology that's been invented, the FCC attempts to insert itself between the producers & consumers to control communication even more... Always - of course - for the consumers "own good".

However... In a shocking twist of events, for once, liberty scored a victory over the FCC!

Today, New York Times reported on a recent ruling by the Washington D.C. district Court of Appeals which shut down the Federal Communication Commission's attempts to impose "Network Neutrality" laws.

"WASHINGTON — A federal appeals court ruled on Tuesday that regulators had limited power over Web traffic under current law. The decision will allow Internet service companies to block or slow specific sites and charge video sites like YouTube to deliver their content faster to users.

The court decision was a setback to efforts by the Federal Communications Commission to require companies to give Web users equal access to all content, even if some of that content is clogging the network.

The court ruling, which came after Comcast asserted that it had the right to slow its cable customers’ access to a file-sharing service called BitTorrent, could prompt efforts in Congress to change the law in order to give the F.C.C. explicit authority to regulate Internet service.

That could prove difficult politically, however, since some conservative Republicans philosophically oppose giving the agency more power, on the grounds that Internet providers should be able to decide what services they offer and at what price."

First off... In spite of all the deja vu bleating about how this gives more power to the evil "corporations", this is amazingly good news!

For once, a Federal Appeals Court has actually limited the powers of government to regulate and control the single greatest mass communication tool ever invented. I cannot stress enough precisely how important it is that the internet remains free from political control if we wish to continue to enjoy continual improvements in service and bandwidth across the board...

But there's a lot to talk about just from the passage above... Starting with this idea that Mr. Wyatt apparently believes that the only people interested in limiting the scope of government's power in this area AND the only folks who seem to believe that businesses should be allowed to decide for themselves what services to offer and at what prices are "conservative Republicans".

REALLY!??

There's no one else out there who thinks that a business should be able to decide in what way their own resources are best utilized?

If "conservative Republicans" are the last line of defense between the citizens of the United States and a more politically-controlled internet, we're boned.

For that matter, why is this even couched as a political issue at all!? Surely any business owner understands what happens when they are no longer free to set their own prices and decide for themselves what services to offer to their customers...

No?

Well let's do a thought experiment then, shall we...

Imagine for a moment that you own a business - let's say, a beauty salon, for this example. Each month you have 30 regular customers who come in like clockwork every single week purchasing your top-of-the-line package... These ladies get the full treatment - peticures, manicures, new hairstyles, dye-jobs, etc... The works.

Now... It's a lot of work for you, and it takes up a good deal of your available supply of resources - from shampoos, dyes & conditioners to chair space in your limited studio - and of course, all of your time. Since these sessions are so resource intensive, you charge $150 for the privilege, and naturally these women expect to be pampered...

Of course... The trade off is that you know that these 30 customers account for $18,000 in sales every month, so you commit most of your resources to them, and unfortunately have to occasionally turn away walk-ins, and on very rare occasions have to let other customers know that you're out of their favorite color of hair-dye because your regulars cleaned you out.

The regulars are the core of your business, and they are putting your kids through college and paying your mortgage right now, so focusing on them makes perfect sense. And that's great, right?

Now imagine that some government official decides that it's not fair for you to turn away walk-ins... And it's not fair for you to deny them the full treatment that you're providing for those 30 regulars, and it's WAY not fair for you to charge $150 for the service since a lot of people can't afford that every week.

So they pass a law which restricts your ability to set your own prices, and restricts your ability to decide for yourself who gets first crack at your finite supply of beauty products on any given day... Instead, it becomes a political issue... It must be "equal". Now whoever walks in off the street can demand the best service, and they can take up the bulk of your time, but since it's unfair to charge so much - they'll also get discounted rates.

What happens to your business? What happens to you?

Naturally you realize that the answer to both of those questions involves loss, pain and eventual bankruptcy.

But this is precisely the nature of the economics involved with "Network Neutrality". Fears of Comcast & Time Warner slowing down the access for certain clients and providing higher tiered services to those willing to pay more have led a great number of people to throw out logic, common sense and even the simplest principles of sound economic reasoning and pretend that this time it's different... THIS time, price controls will be a solution, rather than a problem.

And yet... That's idiotic.

But somehow, things like this get twisted around in people's minds and they wind up believing that for some reason rational, easy-to-understand principles of economics only apply to certain human interactions, and not to others. Usually, if you're paying attention you'll notice that the things that we're supposed to believe don't behave in predictable ways are the things that are hot-button political issues and areas where some people are seeking control over others. That's also predictable, but I suppose that's another blog entirely...

What's more asinine about all this is that we already allow multiple tiers for other mass-media (as we should). You don't have to buy cable TV at all, but if you do, you have a number of options from the basic service all the way through to the ultimate premium version that gets you access to 1000s of channels and all the bad movies, sports & porn you want to watch.

So why would we want to mandate a price control on internet service providers? One completely baffling reason is that many governments are beginning to consider access to the internet a "basic human right". Much like other so-called "rights" which require the theft of other people's property and enslavement of human effort to provide, this is a bastardization of the essence of the term. However... This underlying (and really god-awful) philosophy is largely what's driving the FCC's push.

Back to the NY Times piece on the subject, Wyatt notes:

"The F.C.C. will now have to reconsider its strategy for mandating “net neutrality,” the principle that all Internet content should be treated equally by network providers. One option would be to reclassify broadband service as a sort of basic utility subject to strict regulation, like telephone service. Telephone companies and broadband providers have already indicated that they would vigorously oppose such a move."

Do you want your internet run like a public utility?

Really? Rolling blackouts in major urban areas... Complete lack of any form of customer service... No updates to the infrastructure in decades.

Brilliant.

That's what we need, right? Ugh.

But fools and other economic ignoramuses still manage to believe that giving the government more power to control such a crucial product is a good idea.

"After the ruling on Tuesday, consumer advocates voiced similar concerns about Comcast’s potential power over the Internet, saying that the company could, for example, give priority to transmission of video services of NBC channels and restrict those owned by a competitor like CBS.

“Internet users now have no cop on the beat,” said Ben Scott, policy director for Free Press, a nonprofit organization that supported the F.C.C. in the case."

No cop on the beat??

The BASIC NATURE of the internet itself is entirely self-policing! This has been demonstrated thousands of times over, and yet baseless fears of nonsensical corporate control ignores this fact entirely.

In the commencement speech Harvard's professor of Internet Law, Jonathan Zittrain, gave to his alma mater just last year, he talked of exactly this phenomenon in one of my favorite stories of all time regarding internet censorship:

"One day the government of Pakistan sought to filter out YouTube from its citizens. It told its Internet Service Providers to block access to YouTube. One small ISP carried out the order by sending a small lie to its subscribers and neighbors: it announced that it was in fact YouTube. Its subscribers’ packets were then drawn there like a magnet, where the ISP could throw them away, since the point was to block YouTube.

But it didn’t stop there. Within a few minutes word had ricocheted around the Internet that YouTube had moved, and if you were here in Pittsburgh trying to reach YouTube, your packets were going to Pakistan and not coming back – and there was nothing that YouTube, one of the most popular Web sites in the world, and its owner Google, the most powerful company in the world, were particularly privileged to do about it. So how was the problem solved? It’s as if the Bat Signal went up, and the call was answered by NANOG, the North American Network Operators Group, an informal mailing list of nerds, some of whom work for various ISPs. NANOG members diagnosed the issue and promulgated a fix. It’s as if your house were to catch on fire. The bad news is that there’s no fire department. The good news is that some of your neighbors promptly come over with garden hoses and put the fire out, expecting neither payment nor recognition for their help. It’s an extremely powerful civic defense system, powered in large part by goodwill."

Now you might be thinking... "But, Sean... This is about government censoring the internet, not a private ISP!"

True enough. But the principle is the same. The users of the internet are our defense against both government & corporate misdeeds. WikiLeaks is proving this on a daily basis.

Markets respond to demand, and the internet is something many people are very picky about. The fear that Comcast will buy NBC Universal and then pump bandwidth to NBC properties at the expense of CBS ignores so many crucial aspects of economics it's not even funny... For one thing, the consumer of the internet by and large demands unfettered access to the sites they want to visit. Nothing (as I think NBC has proven lately) can make people want to watch NBC shows if the shows on CBS are better... *Cough, cough*.

So here's how this goes down:

First, people like you and me (especially me since I'm a regular user of web-TV and multimedia streaming online) decide what we want to watch. Then, we go to our favorite sites, like (ironically NBC-owned) Hulu, or YouTube, or whatever it happens to be... And we click "Play", only to discover that for some damn reason, our favorite shows just aren't streaming as fast as they used to and we poke around the web to find out why...

Then we discover, to our dismay, that Comcast has downgraded that site in order to promote their less-demanded programming... Then "we" (by which I mean the great amoebic mob that is the interwebz' nerd population) select one of several options:

There are other options as well, but if you'll note the common theme among each and every one of the above choices... Comcast loses money.

Comcast - apart from obtaining a government-granted monopoly (which is another, quite valid, concern in internet service provision) - simply cannot force me to buy their products. As long as that is the case, they are subject to the competitive pressures of the market, and thus are subject working to supply for the desires of consumers. So for Comcast to stay in business, it actually must balance consumer demand with their greed to profit off of 100% their own content.

Thing is, I can't tell you how they'll accomplish this, because until companies start experimenting with different business models, there's no way for anyone to know which ones are going to work or not. I'd be willing to bet that the scenario posed by people in fits of anti-corporate hysterics would fail miserably, simply because I know hundreds of internet users and not a one of them would be ok with consistently lowered quality of service to their favorite sites... But what if the tiers offered only primarily effect content providers and not consumers? For instance, if YouTube is still free to view, as always, but a larger chunk of the ad-revenue generated goes to the ISP instead of to Google...

Furthermore, what if Comcast uses the increased revenue to fund expansions and upgrades to their infrastructure which - like Google's plans to lay fiberoptics, or Verizon's FiOS - greatly improve the quality of internet service for all users? In that situation, which I actually find relatively likely, not only will no one notice a decrease in their bandwidth, all consumers will benefit immensely.

At any rate, the internet itself - like all free associations of individual people (e.g. markets - is entirely self-regulating. The internet is especially amazing at that because of it's unique position as a multi-directional mass-communication tool. We all want the information we want, when we want it. Comcast knows this... Time Warner got an earful from me about this very thing just last year right before I exercised my liberty to find a new ISP, so I know they know it too...

One way or another, mandates and demanding so-called "Net Neutrality" can only result in poorer quality of service and less freedom on the internet, not more.

So the ruling today is a fantastic thing that I'm really glad to be writing about right now and I cannot for the life of me understand why there are any people out there clamoring for increases in power to the FCC. Many of these same people were loudly criticizing the FCC a couple years ago during an infamous "wardrobe malfunction" during the 2004 Super Bowl. Of course now it's different, cause the FCC couldn't possibly use massive new regulatory powers over the internet to pick winners & losers or to censor certain online activities unfavorable to the government itself, right?

/facepalm.

So yeah... Today was a win for liberty, a win for prosperity, a win for private property and businesses of all sizes - which is a win for jobs, and a win for consumers who actually want services to be available to them. Today, the Federal Court of Appeals of Washington D.C. gets a big thumbs up from me.

About the Blog

Essays and debate on economics, art, philosophy, reason, skepticism & liberty. Feel free to jump in with comments and please subscribe. Being proven wrong only gets us one step closer to truth - If you feel I've made an error... By all means, let me know!